The previous year was a very stressful one for many people around the world. Many have lost their jobs, many are struggling to maintain their income, and many more are experiencing significant financial stress. Unfortunately, the COVID-19 crisis is not going anywhere anytime soon, but that doesn’t mean that you can’t take control of your finances and improve your financial position this year.
You don’t even need to hire a financial coach or make any grand sacrifices, you just have to take a more calculated approach to your earning potential and your monthly spending. But that’s just the beginning. Here are the five smart ways you can improve your personal finances in 2021 and banish financial stress from your life.
Make the most of your taxes
First things first, we need to start with the most confusing part of personal finance management – taxes. If you know how to handle your taxes wisely, and have a detailed guide to paying tax in your country, you can get some significant perks and stabilize your financial position in the months to come. While you might think that you only need to pay taxes and that’s pretty much it, you might actually be able to get a tax extension, you may be able to earn rebates when paying taxes, and you can even get a decent tax loan to bridge a potential financial gap in your life.
There are many possibilities here, so all the more reason to start researching taxes in your region. Some banks offer tax rebates for prompt tax payments, and you may be able to get rebates or miles just by paying taxes digitally depending on your region and the available payment options. Take your time to research taxes in your country and capitalize on the available perks.
Cancel what you don’t need
In the modern world where consumerism is higher than ever before, it can be easy to get lost in a jungle of online shopping, subscriptions, and recurring payments in general. If you’re not careful, over time you can rack up a hefty monthly bill just by letting recurring payments slip by unnoticed because you forgot to unsubscribe from a service or a product offering. It’s important to stay on top of all recurring payments so that you can eliminate the ones you no longer need.
For example, nowadays many of us tend to overpay for business tools and software that are offered for free around the web. Google offers a whole suite of business tools that allow you to communicate and collaborate with your colleagues and clients without spending a dime. Popular photoshop software, video editing tools, and PDF readers all have their free counterparts, some of which offer even better features and perks to their users.
Be smart when signing up for products and services, and always research the free products before deciding to spend more money. With that in mind, be sure to finally cancel the subscriptions you don’t even need.
Develop new income streams
Of course, it’s not just about minimizing expenses, it’s also about maximizing your revenue. Your goal should be to improve your existing revenue stream, but also generate new revenue streams, in order to secure your financial position, create a safety net, and build financial independence.
If you’re offering a service, then getting more clients is a good start. On the other hand, you should also try to expand into other fields and create revenue streams in complementary sectors if you can. To do this, you can expand your product offering, start providing new services to clients, or develop a side business that doesn’t take up much of your time. If you have some capital to invest, for example, you can also invest in a passive income source such as real estate to start generating revenue from rental income.
Plan your weekly grocery list
Stabilizing your financial situation often comes down to planning and meticulous organization, and that means that you should plan for your expenses well in advance. When you make a spending list, you know exactly how much money you need on a weekly basis, and you’re able to stick to your budget.
On the other hand, if you always wing it, you’ll invariably spend money on the things you either don’t need or didn’t account for in your budget. This can be a slippery slope, and all of a sudden you’ll find yourself running out of money. Be sure to avoid this common pitfall by creating a weekly grocery list, factoring in small unforeseen expenses, and sticking to the plan.
Track all expenses and optimize your spending
Lastly, use technology to take control of your spending and finances. There are countless apps out there that allow you to seamlessly track all your expenses, create budgets for the upcoming month, and optimize your spending in an efficient and effective way.
Stay consistent and punch every expense into the app to keep a close eye on your financial status. This will not only help you optimize your immediate spending, but it will also allow you to spot patterns quickly and fix unhealthy financial habits before it’s too late.
Achieving financial success during trying times is a difficult challenge, but it’s far from impossible. Use these simple tips to regain control over your finances and set the stage for financial success and independence in 2021.
About the Author:
Keith Coppersmith is a business and marketing expert who has experienced both the rise and fall of many businesses. As a regular contributor at BizzmarkBlog, he enjoys writing and providing insight of the industry based on both practice and theory.